Northumberland scheme improves by £30m in Q2

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UK - The value of the Northumberland County Council pension fund increased by more than £30m (€34.1m) in the second quarter.

Figures published ahead of the latest pension fund committee meeting showed the value of the scheme had reached £552.1m at the end of June, up from £519.6m three months earlier, although this is still almost £100m lower than the £652.9m recorded in June 2008. (See earlier IPE article: Northumberland appoints investment adviser)

The Northumberland pension fund is invested primarily in a passive portfolio managed by Legal & General but also has allocations to private equity, property and active UK and global equities and active bonds.

For the second quarter Northumberland produced a return of 8.1% against the benchmark of 6.6%, and is a significant improvement from a return of -8.4% in the three months to the end of March 2009.

Meanwhile the pension fund committee has been recommended by the council's director of resources to take advantage of a free class action monitoring service, run by US law firm Cohen Milstein, to identify potential claims.

The move to employ a monitoring service follows a decision in February to consider whether it would be beneficial to engage a provider to investigate potential claims, and/or submit class action claims on the fund's behalf.

However the report from the director of resources noted the majority of any potential claims would relate to the scheme's US shareholdings, of which half are managed passively by Legal & General in a unitised fund. But this means the pension fund is not the beneficial owner of the underlying shares so it is up to the fund manager to pursue any claims.

Therefore any potential unclaimed income from class actions would be restricted to current or previous US equity investments managed on a segregated basis. Under the fund's current asset allocation this means just 2.25% of the total assets may perhaps be eligible for some unclaimed class action income.

The director of resources has therefore recommended: "as a starting point in order to consider whether there may be class action claims worth pursuing, it is proposed that Cohen Milstein be engaged to provide a class action portfolio monitoring service, to cover the two years' data which Northern Trust will provide at nil cost".

A report on the results of the monitoring service will then be taken into account when deciding if the process should be extended further back into the pension scheme's earlier shareholdings.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com